NABARD launches dedicated debt and credit guarantee product for NBFC-MFI’S

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NABARD launches Credit guarantees Programme for NBFC-MFI’S

The National Bank for Agriculture and Rural Development (NABARD) had introduced a dedicated debt and credit guarantee product to provide an unobstructed flow of credit in the rural areas due to the COVID- 19 Pandemic.

The product-Structured   Finance and Partial Guarantee Programme to NBFC-MFI’S necessitate providing of partly guaranteed combined loans to small and mid-sized microfinance industries (MFI’S). National Bank for Agriculture and Rural Development (NABARD) signed a contract with Vivriti Capital and Ujjivan Small Finance Bank to bring up an initiative to intensify the approach to feasible finance for low-income households and mid-sized micro-enterprises. The partially guaranteed loan facility will produce finance to the millions of households, business markets, and agriculture in rural areas to go through the post-pandemic COVID-19 situation mentioned National Bank for Agriculture and Rural Development (NABARD) Chairman G R Chintala.

It will help to aid about Rs 2500 crore funding in the initial phase and expected to upgrade thereafter. The programme was relied upon to cover 28 states among 1 million families and 650 districts. The pooled loan issuance (PLI) structure provides the borrowing bank adequate ease through National Bank for Agriculture and Rural Development ( NABARD) partial credit protection, reducing the cost of capital as the rates of the loans notch up for helping the lender to meet the priority sector goals.

The structure will collect the risk of multiple borrowers and add a surface of partial first loss enhancements from a highly rated guarantor. For enabling the first transactions, National Bank for Agriculture and Rural Development (NABARD) and Vivriti made a partnership with Ujjivan Small finance bank.

Since the start of the pandemic,  National Bank for Agriculture and Rural Development ( NABARD) has turned out exceptional liquidity lines and has dispensed around Rs 2,000 crore to mid-sized microfinance industries(MFIs) and non-banking money related organizations or non-banking financial companies (NBFCs). NABARD through this method has additionally made way for an industry-wide cooperative and aggregate activity plan for money related consideration. It has additionally guaranteed that the recipients of the programme are small and medium-sized MFIs (normal rating of BBB and normal size of Rs 500 crore of assets under administration) that work in provincial hinterlands and serve farmers, merchants, rustic organizations, and families.

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